The present invention is directed to computer systems. More particularly, it is directed to a computer-implemented tool and user interface for planning with conformance options.
Traditionally, managing finances has been a largely manual endeavor. In recent years, more and more individuals and small businesses have begun to use software tools to assist in various aspects of finance management and/or tax management. Such tools are relatively inexpensive, typically run on relatively affordable personal computers, and provide intuitive, easy-to-use interfaces that do not require extensive financial or software expertise. The finance management tools help to simplify and automate a variety of finance-related tasks, such as balancing checkbooks, managing investments, payrolls, sales and expenses, paying bills and the like, and the tax-related tools help users prepare tax returns, estimate future taxes, etc.
Tax-related software tools can be broadly classified into at least two categories: tax return preparation tools, and tax planning tools. Typically, tax return preparation tools are used to prepare and file tax returns for various tax jurisdictions; e.g., in the United States, federal income tax returns may be filed with the Internal Revenue Service, and state tax returns may be filed with one or more state revenue services corresponding to states in which the taxpayer resides or earns income during a particular tax period. Data used to prepare the tax returns (such as income from various sources, tax withholding amounts, deductions, etc.) is typically provided to the tax return preparation tool, either manually or via downloading. The tax return preparation tool helps the preparer to avoid common mistakes such as arithmetical errors, omitting to fill out a required portion of a tax form, forgetting to consider a tax deduction, etc. Given the complexity of tax regulations, tax preparation professionals or experts are often employed to prepare the tax returns, although non-professionals also use tax return preparation software in large numbers. The process of preparing a tax return often requires a non-trivial amount of time and effort, especially given the legal and financial penalties possible for filing incorrect tax returns. Typically, therefore, users of tax preparation software strongly prefer that a tax return that has already been prepared (and, for example, filed or at least checked for correctness) not be modified.
Tax planning tools typically offer users the ability to make projections or estimates for future tax liability (or refunds). For example, users may design various hypothetical scenarios for the future (e.g., an increase of 10% in one spouse's salary, an increase of 20% in another spouse's salary, and an increase of 5% in health-care costs compared to the current tax year), and quickly view the tax implications of the hypothetical scenarios. Professional tax preparers or accountants frequently use tax planners to help their clients prepare for future tax years, e.g., by taking specific tax-related actions such as changing contribution levels to tax-deferred accounts, modifying investment portfolios, etc. Some tax planner tools may allow users to choose among different modes of filing taxes—e.g., to compare the tax liability of a married couple in the United States based on filing income tax returns in the “Married Filing Jointly” mode or the “Married Filing Separately” mode. Typically, tax data that may be used to prepare a tax return for a particular tax period is exported from a tax return preparation tool to a tax planner tool, and the tax planner tool uses the exported data as well as the hypothetical scenarios to prepare tax projections, either for the same tax period or for future tax periods. Tax planner tools are usually designed to provide tax projections in real time: as soon as a user provides input specifying a change to a scenario, the tax planner tool is expected to immediately show the impact of the change, for example by highlighting a changed liability amount or refund amount, or generating a modified pie chart or graph.
Tax liabilities, possible refund amounts, etc., can be affected by tax legislation at various levels of government. Accordingly, tax-related software tools have to take tax legislation into account. Unfortunately, current tax planning software typically cannot easily isolate the impact of specific legislation on projected taxes. For example, a user may want to know how much of an impact a particular taxation-related piece of legislation has on the user's projected taxes for the next year, compared to the impact of a different taxation-related act, and there is usually no easy way for the user to do so. Furthermore, current tax planning tools typically require tax data that is to be used to prepare a tax projection to be recalculated and re-exported from a tax return preparation tool in order to determine the effect of enacted tax legislation. That is, to incorporate the effects of tax legislation changes, tax planning tools typically rely on tax return preparation tools, potentially leading to unexpected delays and additional work on the part of the user, and/or requiring undesired modifications of already-prepared tax returns, to generate tax projections.